Miami's good times roll - but for too few and for how long?
By Michael Lewis
Miami is reveling in good times. While growth in the rest of the nation is the weakest in nearly two years, Miami's economy is booming - for some of us.
Our unprecedented housing boom has triggered boomlets through the county's upper tier, breeding a euphoric sense of future.
The psychological value of money has been debased in that rarefied atmosphere to the point that a half-million-dollar rise in the price of a residence in a few months seems normal. What's a half-million, anyway?
This blue-sky vista is wonderful to a point. Unbridled optimism can be self-fulfilling, inducing investment that is key to growth.
In the public sector, we tax ourselves to build structures and transportation and, if we're smart, invest in human capital through education and health and social services.
In the private sphere, we build the residences and business structures that will serve the future and, if we're smart, nurture and educate a broad spectrum of people as workers and leaders.
So how could we go wrong basing our future on this rosy outlook?
First, by assuming that because the upper tier is enjoying a boom, everyone else is, and second, by forgetting the lessons of history that what can go up eventually goes down and that Miami, in particular, is a roller-coaster, riding the ups and downs.
That first concern is that our boom doesn't touch everyone. Huge numbers of people in this county get at best trickle-down benefits from upper-end euphoria that at the lower end become droplets.
Setting aside debate over the fairness, the practical effect is to further divide haves from have-nots. Since the haves are few and the have-nots many, we severely constrain our future by backwatering so many people. In purely economic terms, we waste vital resources. Waste does not breed long-term success.
The second concern is Miami history. Newcomers have been here only for the days of wine and roses, not the mornings after.
In 1926, much land in Miami was traded several times a day at rapidly soaring prices. It was a seemingly never-ending boom - until a hurricane ended it. It took some land more than three decades to rise again to those pre-hurricane prices.
In the early 1980s, Venezuelan investors abroad bought condos along Brickell Avenue by the dozen, expecting to flip them for big profits. But they only made small down payments, and when Venezuela's economy collapsed, they walked away from their 10% and Miami's economy skidded for years.
OK, that could never happen again, because ...
True, the exact circumstances of the 1926 hurricane and the 1980s bust and other downturns won't return, but we're acting as though we are impervious to all hurricanes and disasters abroad.
This is no wish to cut our good times short. Let them roll on and on - while they roll. But spread the good times around broadly and prepare for the day - one inevitably comes - when times are no longer so rosy.
Today, Miami alone has 233 high-rise housing projects in the pipeline. But less than two decades ago, a former official recalls, in a single year, the city issued not a single major building permit - not one.
Could that happen again?
Choices we make today can cushion us in similar trying times or exacerbate them.
Do we build reserves, or do we assume more and more public and private debt? Do we over-commit to public infrastructure that we can afford to build today but may not be able to operate in trying times?
Remember the beautiful Claude Pepper fountain the City of Miami had built in Bayfront Park? The city soon couldn't afford the electricity to keep the water flowing - so it ripped out $1 million worth of waterworks to save money. Let's make sure we can operate tomorrow the infrastructure we create today.
Choices that can shape our future:
Do we open the door to slot machines? Fritter away transit taxes? Build cash reserves in government and business? Fully endow every arts and cultural facility before we build it? Safeguard the $2.9 billion in bonded spending that we voted for in November? Strengthen basic education for every pupil in our county? Balance our economy rather than rely on housing alone? The list goes on.
What yardstick will we use in decisions? Or will they arrive by default, with euphoria carrying us into a future where rosy skies may turn to an economic downpour?
Miami is hot. The globe is looking at us as everything from a new hub for art to a growing film capital to, yes, the hottest condo market on the planet.
But careful civic, government and business planning is as vital in good times as in bad. In bad times, we husband whatever cash we can find. In good times, we should plan for the day when we'll need to do that again - and set aside the reserves now to avert a disaster.
If you need yet another reason for concern, it's this: In even the best of times, this county barely adds enough new jobs to cover added population. While the top economic tier booms, there's little growth at the bottom.
Leaders should expand participation in the boom today and, heeding history's lessons, prepare now for days when boomlets may fall silent.